Bulletin E-Edition:
Backers hope a lighter beer-tax plan has a shot
By Nick Budnick / The Bulletin
Published: June 16. 2009 4:00AM PSTSALEM — Rep. Ben Cannon, D-Portland, is proposing a new, slimmed-down beer tax he hopes can slide through the 2009 Legislature in its final days.
Earlier this year, Cannon and Sen. Floyd Prozanski, D-Eugene, proposed jacking up Oregon’s excise tax on beer — which at a penny a pint is one of the lowest in the country — by about 1,900 percent.
They said such a hike would fund drug and alcohol addiction services in Oregon and help close a hefty deficit in the 2009-11 budget.
But House Bill 2461 soon went flat, thanks to a passionate and well-coordinated response from Oregon beer lovers concerned about the fate of the state’s craft breweries.
Now, with less than two weeks left in the 2009 session, Cannon and Prozanski have concocted a new proposal they say would largely spare Oregon craft brewers and possibly even help them.
Specifically, they want to add another penny per pint to the tax paid by small brewers who produce no more than 2 million barrels per year nationwide. According to Cannon, all Oregon brewers would fall into this category.
Large brewers, however, would see their tax rate jump to nearly a dime per pint. Cannon says only the largest brewers, such as Anheuser-Busch, would fall into this category.
Cannon said that after Alaska passed a similar two-tiered beer tax increase in 2002, smaller breweries gained significantly in market share, which he called “solid evidence” that the tax helped local brewers by narrowing the price differential with mass-produced beer.
Cannon was echoed by Prozanski, who called the idea “very reasonable.”
The idea has not been formally introduced, but Prozanski said it’s getting a warm reception among those he’s spoken with. The two hope that House Democratic leadership will authorize a hearing so their old bill can be infused with their new idea.
But one of the most vocal opponents of the old beer tax proposal, Gary Fish, the founder and president of Deschutes Brewery Inc., isn’t wild about the lighter version of the beer tax either.
He said that consumers are likely to see even greater price hikes when distributors and retailers add their own markups based on the new, higher per-barrel price. Specifically, he said a per-pint tax increase of a penny could turn into a price increase of about a nickel per pint in restaurants.
“It’s going to have an impact. It may not be immediately visible,” he said. “But it’s going to have a negative impact.”
While not overjoyed, Garrett Wales, co-owner of 10 Barrel Brewing in Bend, was less gloomy in his predictions.
He said that with the new, smaller tax hike proposal, “I would guess that there would be a minimal increase to consumers. … It’s obviously much more promising than a 1,900 percent tax increase, but certainly not a tax that we’d be looking forward to.”
Cannon said that even though he thinks it’s a good plan, it may not come together. He doesn’t know how enthusiastic fellow lawmakers will be over the idea given the several tax hikes already approved by the 2009 Legislature.
Similarly, Sen. Ginny Burdick, D-Portland, chairwoman of the Senate Revenue Committee, noted that the Legislature is expected to adjourn very soon.
“I would be very receptive to it,” she said. “But it’s very late in the game, and I have no idea if the votes are there.”
Prozanski said that he and Cannon hope to hear back in the next day or so whether the new proposal will be granted a hearing.
Nick Budnick can be reached at 503-566-2839 or at nbudnick@bendbulletin.com.
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